Sigurt Vitols

Examining the influence of board level employee representation on responsible practices in large European companies

Sigurt Vitols, Berlin Social Science Center (WZB) and European Trade Union Institute (ETUI)

» Full paper: ilera-2019-paper-288-Vitols.pdf

Although the literature on corporate social responsibility (CSR) and sustainability practices has become very large, almost no studies have looked at the influence of worker representation on these kinds of practices. This is surprising given that workers are universally seen as one of the central stakeholders in companies. Using data gathered by a sustainability ratings firm Vigeo Eiris on sustainability practices at large European companies (STOXX 600), this paper shows that having employee representatives on company boards has a positive and significant association with better sustainability practices across the board, including not only human resources practices, but also human rights, environmental, community involvement and other business practice policy domains.

Sigurt Vitols, Berlin Social Science Center (WZB)
Robert Scholz, Berlin Social Science Center (WZB)

» Full paper: ilera-2019-paper-289-Vitols.pdf

An increasing amount of research is showing that companies are becoming more short-term in their investment time horizons, i.e. companies are sacrificing long-term investments (even though they would be profitable) in order to increase their short-term payments to shareholders in the form of dividends and share buybacks. Up to now, this literature has not examined the influence that board-level employee representation (BLER) may have on company investment time horizons. Using a unique six-component measure of codetermination strength in German companies, the Mitbestimmungsindex (MB-ix), this paper shows that BLER has a positive influence in lengthening company investment time horizons.